He will sit on a six-strong ‘Executive Remuneration Working Group’ which also includes Nigel Wilson, boss of insurance giant Legal & General and David Tyler, chairman of Sainsbury’s.

They will put forward proposals in spring next year to simplify pay structures. Others in the group are Newton Investment Management boss Helena Morrissey, Russell King, the remuneration committee chair at power generator Aggreko and city grandee Edmund Truell.

Godfrey says they will look at the ‘full gamut’ of executive pay, including perks and long term incentive awards. These have resulted in huge windfalls for a series of company bosses after shares have soared in value.

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Godfrey said: ‘This has been a difficult nut to crack. It is often difficult to tell whether rewards are being earned for exceptional management performance or mediocre performance flattered by favourable external factors.

‘There is rising concern about the number of pay awards which are controversial with shareholders and the wider community. This is bringing businesses into disrepute.’

The salvo comes as IA member Royal London launched a blistering attack on Sports Direct ahead of its annual general meeting tomorrow.

The IA has already warned shareholders about the retailer’s ‘excessive’ bonus scheme and its decision to lower performance targets for the staff bonus scheme.

But Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, went even further, describing the bonus changes as ‘unacceptable’.